Maybe you’ve heard the statistics before, but if not, here is a sample.   Fewer than 33% of family owned businesses (FOB’s) make it to the second generation. The average life span for a FOB is less than 25 years… that just happens to be the average tenure for a founder. Only about 15% of FOB’s make it to the third generation and just 3% beyond that.   Just like any other business, many of the fundamental problems that the leaders of FOB’s face are related to people. People problems that are simply difficult in the non-FOB arena can become potentially disastrous in the FOB world. Consider these common situations and the magnification that occurs in FOB’s:   What happens when the organization is downsized? Not only do you lay off some of your employees, some of those employees may be relatives that you entertain in your home for the holidays! Succession planning requires significant planning in any business.  FOB’s may have to deal with family competition and tensions that can easily overshadow the difficulty of these already challenging business issues. Separating work and family is always a challenge. In an FOB, competition, tension and disagreements in the family can easily spill into the business and vice versa. It is easy for behavior to deteriorate to levels not typically seen in non-FOB’s, with negative impact on morale and productivity.   Keep in mind, these are but a few of the unique stressors faced by a FOB.   Knowing this, why would someone starting a business consider such an endeavor with all its potential pitfalls?   When you talk to the founders of FOB’s you find there are countless reasons people continue to develop and stay involved in them.  Here are just a few reasons people continue to develop and maintain FOB’s:   1.   They allow a legacy to be defined and passed along to subsequent generations. 2.   They can enhance the bond between the generations and strengthen the relationships of those involved. 3.   They can provide financial security to the family and allow a sense of control over the family destiny. 4.   They can become a defining vision for the family, illustrating their values, their traditions and their contribution to the community.   If you are a part of a FOB, these are three steps I encourage you to take now to maximize the positive aspects of your business and minimize the potential for difficulty:   Focus extra attention on succession planning, starting now. Define the skills needed early in the process and outline steps to be accomplished for those interested in critical positions. Separate the process of passing along wealth from the process of assigning duties in the company. If the goal is to transfer wealth from one generation to another, avoid using promotion in the company as the mechanism to accomplish this goal. Create a culture that clearly supports your vision of business strategy, success and family. If you want your family members involved in the business, make sure they understand and buy-in to this culture. Nothing sabotages a workplace culture like an unproductive family member who is protected from the consequences of their behavior by the nature of their family ties.   Focusing on these common obstacles to success in FOB’s doesn’t guarantee business success. However, taking action on these issues increases the likelihood that the business and family can both remain successful and pass along their legacy from one generation to the next.                                         ____________________   Allan Schmidt, Ph.D. is president of Corporate Consulting Group. He helps individuals accelerate their management and leadership development and helps organizations align their strategic vision with their human resource practices. You may contact him at 913.381.6835 or aschmidt@corporateconsults.com. His website is www.corporateconsults.com     <<Click here>> to download a printable copy of this article.